* Recurring Payments Demo
* How Recurring Payments Work
* Recurring Payments Terms
* Recurring Payments With Express Checkout
* Options for Creating a Recurring Payments Profile
* Recurring Payments Profile Status
* Getting Recurring Payments Profile Information
* Modifying a Recurring Payments Profile
* Billing the Outstanding Amount of a Profile
* Recurring Payments Notifications

Source from paypal

Additional source: http://articles.techrepublic.com.com/5100-10878_11-5331883.html

For Recurring Payments Notifications, you can use IPN. Merchants are notified of certain events through IPN. For recurring payments profiles created using Express Checkout, buyers are also notified of specific events by email.

To activate the IPN, you need to login to your account and activate it from “Instant Payment Notification Preferences” Menu.

Once payment, subscription started, or subscription ended it will execute the url you entered in IPN setting.

Here are the request from paypal for recurring payment:

Pay

transaction_subject:, payment_date:00:24:20 Jan 29, 2010 PST, txn_type:subscr_payment, subscr_id:I-TR8AEDTYY3A3, last_name:,,
residence_country:ID, payment_gross:0.10, mc_currency:USD, business:myemail@domain.com, payment_type:instant,
protection_eligibility:Ineligible, verify_sign:AwVFRrppcBWp.SbFNfxVhWwgMJq1AzhZhdCLslBXMKqUWPTs7OhhthbB,
payer_status:verified, payer_email:client@domain.com, txn_id:9E184006CH967554N, receiver_email:myemail@domain.com,
first_name:Adri, payer_id:BRF4CDPWN84AC, receiver_id:DVFZ59JCMFVEN,payment_status:Completed,payment_fee:0.10, mc_fee:0.10, mc_gross:0.10, charset:windows-1252, notify_version:2.9,

subscribe

txn_type:subscr_signup, subscr_id:I-TR8AEDTYY3A3, last_name:,, residence_country:ID, mc_currency:USD,
business:myemail@domain.com, amount3:0.10, recurring:1, verify_sign:A8s9ZB.gPMzpWoypvEK3Oi8kH04SA6rxIBluaeZfMSHesjkeOATMaJRe,
payer_status:verified, payer_email:client@domain.com, first_name:Adri, receiver_email:myemail@domain.com, payer_id:BRF4CDPWN84AC, reattempt:1, subscr_date:00:24:19 Jan 29, 2010 PST, charset:windows-1252, notify_version:2.9, period3:1 M, mc_amount3:0.10,

cancel

txn_type:subscr_cancel, subscr_id:I-TR8AEDTYY3A3, last_name:,, residence_country:ID, mc_currency:USD, business:myemail@domain.com, amount3:0.10, recurring:1, verify_sign:AwLeRoV0CcJ4bqIPyyj4pN2QzIoEA1eWFEwodSF46c0b-.d2eIQHFjiE,
payer_status:verified, payer_email:client@domain.com, first_name:Adri, receiver_email:myemail@domain.com,
payer_id:BRF4CDPWN84AC, reattempt:1, subscr_date:00:24:19 Jan 29, 2010 PST, charset:windows-1252, notify_version:2.9, period3:1 M, mc_amount3:0.10,

There are two variable you need to check txn_type and subscr_id.

You can see that txn_type can be subscr_payment, subscr_signup, and subscr_cancel

To use paypal for your payment processor, you need to validate it because people can tamper the data they send to Paypal and the data that you receive from paypal. You can lost a lot of money, because user might not pay you for your product/ service. That’s why you need to validate this transaction by using Instant Payment Notification (IPN).

Instant Payment Notification (IPN) is a message service that notifies you of events related to PayPal transactions. You can use it to automate back-office and administrative functions, such as fulfilling orders, tracking customers, and providing status and other information related to a transaction.

IPN notifies you when an event occurs that affects a transaction. Typically, these events represent various kinds of payments; however, the events may also represent authorizations, Fraud Management Filter actions and other actions, such as refunds, disputes, and chargebacks.

You can download Paypal IPN sample code here.